The Indian stock market is like a roller-coaster ride where the investor has to face many ups and downs. There are many people who have their own perceptions regarding the investments in the market based on their experiences. At times, they get easily confused by others’ opinions.
Thus, to play safe in the stock market, one has to follow certain rules and avoid certain points which may lead to a pitfall in the funds. Let us see some of the dos and don’ts of the stock market:
1. Stay slow and steady, feel boring in the race of the stock market: The first and foremost point of consideration when investing in the stock market is to not to panic on seeing a media update regarding the stocks. Always go with ventures that are good and have great returns. One should read good books on personal finance and stay with the advice of the best stockbroker in the market.
2. Make your analysis of the stocks: There is no wise man who can tell you how you can beat the stock market. One should always form a deep market analysis, keeping the financial goals in mind. The best option is said to study the performance of top-performing stocks and mutual funds (for approximately over five years) and existing mutual funds (over a period of three months) in order to decide which stock to maintain and what to dispose.
3. Diversify: It is advisable to always go with a variety of stocks in the market. There are many different ways to diversify the total investment like the shares, stocks, real estates, debentures, mutual funds, etc. Playing safe requires some diversification of funds in the different sectors.
4. Don’t panic: The stock market is very volatile and fluctuations are very common here. The stock may fluctuate at a very rapid rate. However, one should not panic at all.
5. Don’t buy stocks in bulk but pick shares in stages: When the prices of shares fall, it should not be the case that one puts all the investment in only one stock and buys everything. It is very important to keep some money aside and use it in the future.
6. Consider all the expenses: When one buys and sells the shares, one has to pay a brokerage fee and a transaction tax on every small transaction made. Sometimes, selling for only small gains can nip away your huge expenses, leaving you in a no profit-no loss situation.
7. Believe in the investments: Don’t go with any and every tip given to you as they may simply lead to losses. The investor must follow to tread cautiously in the stock market. Always invest in the stocks that you truly believe in. Go for the fundamentals. Analyse the company and its stock table and ask yourself if you want to be part of it – or not.
Consider the pros and cons of making any investment. It is better to plan for a long-term goal and go with the long term investments in the market. Play safe!
Featured image used for representative purposes only.